The Importance of Branding

Posted on Jan 28, 2015

Brands are built on many factors, whether it is the visual elements of the brand - the colour, logo, design or the ingredients in products. IP specialist Loretta Maxfield looks at the importance of a brand and the consequences of negative impacts.

A couple of stories from the past week illustrate the value of brands and how they can be tarnished quite easily. You don't have to read the business pages to know that Tesco has been in difficulty lately. It remains the UK's biggest retailer but, according to former CEO Terry Leahy in a 'Panorama' interview earlier this year, has lost its focus on customers and is no longer perceived as offering best value in the high street. Many customers have found discount retailers Aldi and Lidl, as well as a more fragmented shopping pattern less reliant on out-of-town stores, to be a better way of making sure 'every little helps'. The blizzard of price promotions, special offers as well as Clubcard vouchers and points offers appears to no longer engender customer loyalty but rather a feeling that they are being deliberately confused and losing track of what something should actually cost. It also looks as if the horse meat scandal of a few years ago may have had longer term effects than might have been expected and resulted in a loss of trust by consumers.

New CEO Dave Lewis has implemented a radical turnaround plan involving head office closures, store closures and price cutting, though some analysts think it might not be radical enough. What is apparent, however, is that the Tesco brand no longer resonates with consumers to quite the extent it once did. Regaining some of that prestige and customer affection will be a key objective of a long-term recovery.

Not all consumer businesses lack confidence in their brands, however. You might have noticed that last week, it emerged that Cadbury's Creme Eggs are no longer using the company's famous 'Dairy Milk' chocolate but rather an alternative, and by all accounts cheaper, mix of chocolate. Now it is not unusual for large food manufacturers to tweak recipes: given the scale of manufacture, minor changes in ingredient mix can have a significant effect on profits. Yet it's fairly unusual for these things to receive quite so much attention. Cadbury's were, presumably, banking on the strength and resonance of the 'Creme Egg' brand to ensure any change in the recipe went unnoticed. Since that has clearly, and spectacularly failed and almost anyone who cares must now know that a 2015 Creme Egg is a different product to previous editions, it will be interesting to see how the brand rides out this challenge to its reputation, or whether the manufacturers relent and reinstate the allegedly superior original recipe.

Yet what both cases show us is that these extremely well-known and historically popular brands are not immune from devaluation or detriment in the modern economy and any business reliant on a brand needs to support and maintain it.